Higher compensation risk in ill-health dismissals

Employers can steer clear of appeal tribunals if they handle staff
dismissals on health grounds with care

Ill-health dismissals, although potentially fair, must always be handled in
a sensitive manner. The Employment Appeal Tribunal’s decision in Edwards v
Governors of Hanson School, EAT 314/99, illustrates how an unfair dismissal on
health grounds can lead to an increase in the compensation awarded by the
tribunal.

Edwards was employed by the governors of Hanson School as a teacher. From
1993 to 1996, he was intermittently absent on health grounds, but from
September 1996 onwards he was continuously off work suffering from depression.
Edwards alleged that his illness was caused by stress at work and, in
particular, years of mistreatment by his head teacher.

In January 1997, Edwards agreed to the school obtaining a medical report
from the consultant physician who was responsible for his treatment.

The doctor confirmed that Edwards was suffering from work-related stress,
that he was taking anti-depressants and was undergoing a course of
psychotherapy. The doctor anticipated that he would be able to return to work
within a month.

After Edwards came back, the head teacher reviewed his attendance record and
gave him a verbal warning, which was to remain in force for six months.

Edwards fell sick again. Further medical reports were obtained, but this
time the reports were not shown to Edwards or his union representative. On the
basis of those reports, without any consultation or any other form of hearing,
the head teacher dismissed Edwards.

The governors reviewed that decision and arranged for a hearing. In the
meantime, Edwards was reinstated. But the governors concluded that Edwards’
level of absence was "no longer sustainable" and that he should be
dismissed with notice.

Edwards’ appeal against his dismissal was unsuccessful. Subsequently, he
claimed that he had been unfairly dismissed.

At the tribunal hearing, Edwards alleged that his illness had been brought
about by the head teacher’s behaviour.

However, in upholding his complaint, the tribunal avoided reaching any
conclusion on this issue. It simply ruled that the procedure followed by the
school had been unfair since neither Edwards nor his union representative had
been given an opportunity to comment on the medical reports and there had been
a lack of consultation throughout.

But the tribunal declined to award Edwards compensation (except for a basic
award) on the grounds that, had a fair procedure been followed, Edwards would
still have been dismissed.

EAT decision

Allowing the appeal, the Employment Appeal Tribunal ruled:

– The employment tribunal had been wrong to refuse to consider whether the
loss suffered by Edwards as a result of his dismissal was caused by his
employer’s behaviour.
– It may still be "just and equitable" to make a compensatory award
in appropriate cases where the illness was caused by the employer’s behaviour.
– To reach a conclusion on this point, it was necessary for the tribunal to
investigate and to make findings on the behaviour of the head teacher.

Key points

– A dismissal for work-related stress may be found to be unfair if an
employer fails to follow the usual procedures that apply in ill-health
dismissals.
– In such circumstances, it is open to the tribunal to consider the extent to
which the employer was responsible for the illness in deciding how much
compensation to award.
– The words "just and equitable" in section 123(1) of the Employment
Rights Act 1996 enable the tribunal to take full account of the conduct of the
employer and employee in making an award, provided the award remains
compensatory in nature rather than a punishment of the employer.